R.I. special-needs education collaborative in dire financial straits

Friday

LINCOLN, R.I. — A nonprofit organization that provides services to 88 children with significant special needs is fighting for its financial life, board members say.

The Northern Rhode Island Collaborative, which helps children with autism, hearing impairments and other special needs, has hired a lawyer to help it consider its next financial steps; its executive director, Georgia Fortunato, says insolvency is not among the possibilities.

"Doing away with the collaborative is not on the table," Bernard DiLullo, chairman of the board of directors, said Wednesday.

The board comprises the superintendents from 10 Rhode Island school districts: Cumberland, Johnston, North Providence, Smithfield, North Smithfield, Burrillville, Pawtucket, Woonsocket, Lincoln and Central Falls. They act as the governing body, like a school committee, except that they are not elected. Based in Lincoln, the organization provides services to students from those districts.

The collaborative hired Fortunato in late August. Before that, she was chairwoman of the board for almost four years while she was the Lincoln schools chief.

Fortunato said that when she became executive director, she discovered that the collaborative was in deep financial trouble.

"We were in the hole at least $700,000," she said Wednesday. "Last year, they had $1 million in a money market [account]. It's down to $94,000 now."

"The entire board was told that there was a structural deficit and that there was a plan to increase enrollment," she said. "That was a year ago. When we got on board, this is what we discovered. Revenues did not meet expenses, to the tune of $584,000."

Fortunato said the board wasn't told of the severity of the collaborative's financial status.

"That's a downright lie," said former executive director Joseph Nasif. "The board receives a financial report of status of the collaborative every month."

In April, Nasif said, the organization reported a monthly surplus of $72,000.

A review of the collaborative's income tax filings shows an increase in total revenues in 2013 and 2014, followed by a drop of more than $400,000 in 2015.

During the same period, salaries continued to increase, jumping by more than $200,000 during the 2015-16 school year. About 63 people work for the collaborative. The executive director, who is part-time, is paid $59,000.

What caused the $400,000 deficit in 2015-16?

Nasif said the organization bought a computerized accounting program that was designed for a nine-month school year and did not account for salaries paid during the collaborative's extensive summer program. As a result, those salaries later showed up as a deficit on the books. He said the recommendation to buy this program came from a previous director of administration.

"The board absolutely knew in both May and June that there was a shortfall," Nasif said. "The former chairperson of the board, Georgia Fortunato, and the elected one, Bernie DiLullo, are fully aware of the fact that one month, there was a surplus, and the following month, there was a deficit."

The deficit grew over the summer when the cost of health insurance for teachers and other staff increased much more than anticipated, according to Nasif, who left in early July.

Both Fortunato and DiLullo blamed the collaborative's fiscal woes on declining enrollments.

They said school districts are choosing to educate students with special needs in-house rather pay thousands of dollars to send them out of district. Tuition at the collaborative can run as high as $43,750 per child. There has also been been a movement by public schools, driven in part by federal mandates, to mainstream as many special-education students as possible.

At its peak, she said, the organization had more than 200 students. (Nasif said enrollment peaked around the year 2000.) It now stands at 88.

Michael Mullaine, who represents unionized teachers and other professional and para-professional staff, said the board should have seen this coming. The American Federation of Teachers, Rhode Island, is currently in contract negotiations with the collaborative.

"Better oversight and better business decisions would have helped them be in a better position right now," he said. "Why didn't they raise tuition?"

Mullaine said there was a long period, between 2010 and 2017, when there were no increases in tuition, which might have led to today's financial problems.

Meanwhile, Fortunato said she is scrambling to balance the books, raising tuition by 10 percent, allowing vacancies to go unfilled, even selling a van. The tuition hike alone raised an additional $450,000, she said.

Fortunato is also meeting with every superintendent in the collaborative to drum up new enrollments.

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